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CL Market Profile Analysis
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CL Market Profile Analysis

  #231 (permalink)
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DCB,

thanks for your post. Would sign what you wrote wíthout hesitation. You are absolutely right about what drives price. I also believe that the big guys look at floor pivots and fibonacci lines. Gathering points to take the bus together. Nothing sicentific or magic, just self-fulfilling prohecy, as you said. It works, because it is used, and it is used because it works.

The chart below shows support and resistance areas. Tradeable only if confirmed by price action. There is a major fib level at 73.55

Second time it hit that level during the US session was a 2B setup.

Chart is simplified, not my main machine.

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CL Market Profile Analysis-cl-10-10-30-min-20_08_2010.jpg  
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  #232 (permalink)
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DeadCatBouncer View Post
Respectfully, it seems like many people here are looking far too deep into this analysis. This MP stuff is craziness IMHO. The powers that ultimately control market price don't look at all that. They don't need to, rather, their leverage alone determines where prices will go. If you can determine (and you can) where the heavy weight professionals accumulate and distribute their supply you can ride the same self fulfilling waves that they do. Sure they cloak their intentions in the eye of the retail trader but that's the point. Try getting a 2k lot on the CL filled inside a 30 tick range, not the easiest thing in the world to do, therefore, they spread it out over a relatively wide range. And in order to do that, within their fill target range, they need to get people on the other side to be more than willing to give up those cars. So how do you see it? Well its right in front of all of us, including the smart money, and it has nothing to do with these various lagging shenanigan indicators. Current and past daily and weekly pivots + volume + where price closes based on those levels and the volume attributable to said price = seeing what the professionals are doing (accumulating supply from the under-leveraged/weak holder or distributing their supply to those same gooses who make them ridiculous amounts of money every day).

Can anyone here tell me using these various indicators you folks use why, with precision, the CLV0 just magically stopped right at 73.44 on the 11:55am EST bar yesterday (8/20), and why price closed, more importantly, on that same bar at 73.53? Well its the same reason that price stopped at 73.53 about five and a half hours prior when on the 6:25am EST bar price wouldn't drop below 73.53 on massive euro-session volume. Just look to the left a few days prior and more closely look at the weekly pivots for 8/18. What do you see for 73.53? Hmmm. Now the question that begs to be answered is how do you know where they will stop price again? Well, you don't know, hell they don't even know yet, but volume and where price resides related to that next unknown level will tell us all. From there, you wait for confirmation of whether that level will be respected and then take your position (volume and price related to volume at said levels confirms that levels strength).

Sure, smart money battles with one another every day, but in the end the stronger one's who have more pull (that day) determine when price stops going up or down for the session. They don't just arbitrarily buy and sell from their massive accounts related to lagging indicators, oscillators, MP, crossovers and the such. They take positions based on specific prior and current levels, and where they feel they can get their massive lots filled. This is done in the most clandestine manner possible in an effort to get their fills as reasonably fast as possible and they get it primarily from the retail side. Sure they take massive heat sometimes to get their fills, but there's no other way for them to do it when we're talking about that type of size. There's no direct stairway to heaven in trading, even when you control the market, there's always heat that must be taken in order to bank coin. The temporary heat that these guys feel in order to properly take position are amounts that eclipse what most well funded retail traders use as total intraday margin leverage. Being down $500k for a short time on a 2k buy lot is not a ridiculous amount of heat ($20,000/tick LOL). And if other powers that be start to lay on heavy pressure away from their position that's when they'll pull out another 4-5k lot and the toughest kid on the block that day is determined (PS: that's why you have to wait for the bar to be painted). You can clearly see their intentions if you look closely, but one certainly doesn't need this gamut of lagging indicators to determine intraday price action.

Simplify your lives, and just read the tape.
DCB


Deadcat,

I tend to agree with you in theory and generally speaking, but I don't agree that Market profile is lagging. Market profile is NOT an indicator, but a display of information. It shows where the activity took place in terms of time spent at a price level or zone and in terms of volume. Because it is based on price, time and volume I would say it has more validity than daily or weekly pivots based on a formula of the high low and close of prior bars. With that said, yes, the powers that be may very well be using current and prior pivots as stopping points and not MP or indicators.

As far as reading tape goes, I have heard that it is a skill that can take years to master and is not just a matter of looking at how much red or green appears on the time and sales. If I am wrong about that please let me know.

Lastly, please post some charts of what you are describing so that we can learn from it. You can even start a thread if you like.

David

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  #233 (permalink)
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Fat Tails View Post
DCB,

thanks for your post. Would sign what you wrote wíthout hesitation. You are absolutely right about what drives price. I also believe that the big guys look at floor pivots and fibonacci lines. Gathering points to take the bus together. Nothing sicentific or magic, just self-fulfilling prohecy, as you said. It works, because it is used, and it is used because it works.

The chart below shows support and resistance areas. Tradeable only if confirmed by price action. There is a major fib level at 73.55

Second time it hit that level during the US session was a 2B setup.

Chart is simplified, not my main machine.


If the big guys have so much ammunition to do what they want where they want and when they want, and don't need any indicators then why would they bother with fib levels.? Wouldn't they be the ones creating the levels?

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  #234 (permalink)
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Looking forward to continuing this conversation with you guys tomorrow. Real quick though: David_R, I don't know much about MP, I should not have included that in my post as a lagging indicator, however I can almost promise that it isn't as valuable as you think, i say this with all due respect and do not intent to offend.

Fat Tails: How the Fibonacci's sequence exists in the natural workings of life is astounding to me. 1,1,3,5,8..... freakin' amazing stuff I know. However I will touch on my thoughts related to Fib levels tomorrow as they are hit and miss IMHO and not as strong as "volume at level." I'll also show you how a Fib may have played a role at the mid-day highs of yesterday's session. But it was in confluence with another prior day weekly pivot.

I gotta fly and shoulda walked out my front door 10 minutes ago. So I'll post back tomorrow morning and look forward to continuing this discussion.

DCB

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  #235 (permalink)
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David_R View Post
If the big guys have so much ammunition to do what they want where they want and when they want, and don't need any indicators then why would they bother with fib levels.? Wouldn't they be the ones creating the levels?

If there are accepted as gathering points, these levels can work. If the big guys decide to ignore them, the levels will be meaningless. So I use these levels supposing that they are used by others.

This approach may work for one instrument and not for another depending on what fads are followed by the population of traders. It ain't no science, just a n-person game.

This does in no way invalidate market profile analysis. If you look for a point of control, it is just a more sophisticated version of a floor pivot. I am just not ready to use market profile in my trading approach, as I do not yet master it.


Last edited by Fat Tails; August 21st, 2010 at 06:38 PM.
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  #236 (permalink)
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DeadCatBouncer View Post
Looking forward to continuing this conversation with you guys tomorrow. Real quick though: David_R, I don't know much about MP, I should not have included that in my post as a lagging indicator, however I can almost promise that it isn't as valuable as you think, i say this with all due respect and do not intent to offend.

Fat Tails: How the Fibonacci's sequence exists in the natural workings of life is astounding to me. 1,1,3,5,8..... freakin' amazing stuff I know. However I will touch on my thoughts related to Fib levels tomorrow as they are hit and miss IMHO and not as strong as "volume at level." I'll also show you how a Fib may have played a role at the mid-day highs of yesterday's session. But it was in confluence with another prior day weekly pivot.

I gotta fly and shoulda walked out my front door 10 minutes ago. So I'll post back tomorrow morning and look forward to continuing this discussion.

DCB

Waiting for your reply.

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  #237 (permalink)
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CL

DCB,
Very nice. can you give examples of:

"where price closes based on those levels and the volume attributable to said price"

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  #238 (permalink)
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David_R thanks for your continuing comments on this thread. I've really enjoyed the approach and discovery. Are you still utilizing OFA's software with CL or any other instrument's?

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  #239 (permalink)
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meyer99 View Post
DCB,
Very nice. can you give examples of:

"where price closes based on those levels and the volume attributable to said price"


I don't mean to interrupt DCB, but i wanted to give my take on what transpired and see what DCB says. I also find it much easier to perform this type of analysis after the fact then live.

David

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  #240 (permalink)
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FactChecker View Post
David_R thanks for your continuing comments on this thread. I've really enjoyed the approach and discovery. Are you still utilizing OFA's software with CL or any other instrument's?


I'm not currently using the OFA software with CL. From what I've heard it really works best with higher volume markets such as the ES. I know that they say it can be used in other markets, but I don't think CL is one of them.

I may take a look at OFA again with the stock indexes, specifically ES to see what kind of indications I get with it when I have a setup. I think if order flow is confirming the setup then that can add to the strength of the trade setup. I don't know if YM is thick enough for the OFA software.

David

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